On January 7th, GMR Infrastructure Ltd informed the Bombay Stock Exchange (BSE) that it had terminated the concession agreement entered into with National Highways Authority of India (NHAI) for the US$1.2 billion six laning of 555 Km Kishangarh - Udaipur -Ahmedabad highway.

Days later GVK Infrastructure also pulled out of the Rs 3,000-crore ($559 million) Shivpuri-Dewas project in Madhya Pradesh. Both infrastructure firms cited problems with environmental clearances to proceed with construction of the projects.

Yesterday, Indian newspapers reported that Ashoka Buildcon - a listed firm with investments from private equity major SBI Macquarie - wants to exit from a highway PPP project in Odisha, citing delay in regulatory approvals. According to sources, the company has sent a letter to the National Highways Authority of India (NHAI) to this effect.

The Rs 1,123-crore (US$207 million) project involves widening a 112-km highway stretch in Odisha between Cuttack and Angul. Ashoka Buildcon had signed concession agreement with NHAI in March 2012 and had achieved financial close for the project with loans of Rs 801 crore from Axis Bank. But, the company is yet to get land acquisition and environment clearance. The company also said that project costs were rising on the back of increase in raw materials, which would impact the project's profitability.

NHAI has a problem. The Authority can tender hundreds of projects but the country needs to speed up environmental and land acquisition approvals because the projects become unviable in a matter of months after financial close.

Most foreign companies have stopped bidding for projects tendered by the NHAI and this trend will continue in the next months as more and more problematic projects keep appearing. Unless the project is strategic for the company, there is no reason to continue with a project that has lost profitability due to inefficiencies of the public sector. Only if companies report this problem, public authorities will try to change the mentioned recurring inefficiencies.